Australian Grand Prix no winner, says watchdog

A forthcoming report by Victoria's auditor-general is expected to criticise the rising costs associated with staging the Formula One race in Melbourne, writes JOSH GORDON.

30 August 2010Josh Gordon

2007 Australian Grand Prix. Picture: AP

Victoria's new Auditor-General is heading for a showdown with the State Government over a report that is set to blast the state's much-vaunted major events strategy.

A report by auditor Des Pearson, due within weeks, is believed to deliver a stinging assessment of the Grand Prix, warning of rising public costs while questioning claimed economic benefits.

The report is also critical of the Australian International Airshow, saying the first two days are a taxpayer-subsidised trade show and should not be included when assessing benefits.

The Government says the air show will result in economic benefits worth $100 million, while it says the Grand Prix will boost the state economy by $175 million.

But a source close to the Government estimated costs associated with the Grand Prix would rise by $3 million to $4 million a year under the terms of a new licensing agreement that lasts until 2010.

The source said the cost of the 2007 event was "roughly $28 million" and could blow out to as much as $42 million by 2010.

The draft report challenges the way the Government assesses the economic impact of major events, calling for a more rigorous and consistent approach.

The report , likely to be tabled in the May budget session of Parliament, comes amid growing public concern about whether Melbourne has too many major events and whether taxpayers get value for money.

State Government spending on special events is capped at $55 million a year, about four times more than the next biggest spender, NSW, which devotes $12 million to them.

Senior figures in the Government are known to be concerned about the contents of the report.

Tourism Minister Tim Holding appeared to pre-empt its criticism. "The Government will consider it carefully when it comes down," he said. "All I will say is that all Victorians need to look to the economic benefits of these events but also to the intangible benefits."

The Age believes the Government's benchmark suggests that every dollar spent on a major event should result in at least $10 of additional economic activity. But Mr Holding said the formula was only a loose guideline. He said if it was rigorously applied, events such as the World Swimming Championships and Grand Prix would never be held in Melbourne and "you'd end up with a range of events that would look, frankly, pretty disappointing."

Premier Steve Bracks said Victoria's crowded events calendar was "a good problem to have". "People are saying, 'Have we got too much?' I don't think we have," he said. "Having those regular, major, international events is going to be significant for our economy."

Victorian Major Events Company chief Peter Abraam said in addition to direct benefits, less tangible social benefits needed to be considered.

"There is a range of what I would call triple bottom line benefits ? public confidence, business opportunities and networking," Mr Abraam said.

Audit Office chief operating officer Peter Frost said it would be inappropriate to comment on the report before it was tabled in Parliament.